Macro Perspectives
Monday 3 August 2020
We came into last week expecting the Democrats to use the expiration of the $600/week unemployment as ransom for their bigger demands, which include mail-in voting.
The Republicans have made an attempt to strip that out from the stimulus package negotiations, and just extend it.
The Democrats aren't having it. It's too valuable a bargaining chip for them - they are willing to now hold the economy hostage for their demands.
That doesn't bode well for the economy, as $2,400 to $4,800/week of household income for the 30 million unemployed goes away today. Again, as we discussed last week, this may require Trump to use Executive Order to extend the federal unemployment checks.
Can he do it? Congress has exclusive control of the purse. But once they've appropriated funds, "the President and executive branch enjoy considerable discretions as to how those funds are spent".
Presidential Spending Discretion
Mnuchin said earlier this week that there's still over a trillion dollars yet to be spent from the first package. With all of this building, we ended the week with the S&P500 still around it’s seemingly key uptrend support. Here’s a snapshot of the major equity markets from last week.